Monday, November 24, 2014

Soaring President and Slumming Cabinet Secretaries

Bold Prez
& Dumb and Dumber

The Administration was at its schizophrenic zenith
last week, and admirable high and a mindless low.

A bold President Obama—facing political obstinacy--announced
his totally appropriate executive order
to try and fix our broken immigration system and open our nation’s door to
some, not all, of many illegal immigrants and their families.

IMO, the President’s action was necessary because earlier
a less conservative Congress refused to approve immigration reform and with GOP
control in the House and Senate, juiced by even more Righties, there was little
hope of immigration progress.

The President calculated that a new Congress will not
approach immigration in a more thoughtful and moderate way in 2015, so he used
his inherent authority to start this ball rolling forward in a constructive and
humane way, inviting Congress still to write its own legislation. (Although I
think he did with a tone which suggested they also attempt something that is
anatomically impossible.)

The President ignored the GOP threat not to go forward
without them and Republicans now will try and make him pay (for doing something
on immigration Senate R’s approved a while OK, but who is checking)?

Given how poorly the GOP Congress has treated Obama, what
was there for him to lose?

He stepped across their line, knocked the brick from their
shoulder and told them (paraphrasing), “I want to move forward.” You still can
legislate, he told them, “Pass your own immigration bill.”

We now will hear a list of Obama retaliatory actions the
GOP plans to take, which legislation they will hold up or encumber, ditto on
Obama appointments, funding, government closure (oh no not that, again),
rananna, rananna.

It hurt them the last time, it will hurt them again, since
that kind of behavior detracts from what they claim is their goal to show
leadership and responsible governing.

The
Star and his Non-Stars

As Obama shined standing astride his lofty peak,
two politically tone deaf minions were fast digging valleys and chopping away
at the principle their boss wants to establish, his right to unilateral moves
via regulation.

Dumb and Dumber—staring victory in the face—chose to
ask Jeb Hensarling (R-Tex.) and his colleagues to write a new mortgage finance
bill which I guess they hoped would look different than Jeb’s last one. That
initial Hensarling effort, which barely crept out of the HBC, took the federal
government out of the conventional mortgage business and gave all of that
mortgage activity and the fate of those consumers to the commercial banks.

Everyone knows bank and their subs are honest, caring
institutions, thoughtful about matching families to the right mortgage loans
for them, at affordable rates using transparent and understandable marketing
and closing terms and costs. ;-) (That’s
the symbol for “sarcasm.”)

Did nobody at the WH or the DNC, SDCC, or DCCC tell the
Administration dunderheads they won the GSE fight, since nobody
on the Hill, seriously, was talking about new F&F legislation in 2015?Nobody really wants to open up that political
can of worms which fizzled on all of its sponsors earlier this year and create
mortgage uncertainty—and voter backlash--in the buildup to a presidential
election?

Who Diapers These
Guys?

Did anyone suggest the WH had a clear path to produce
far more affordable housing for middle income families, using its recognized executive
authority, and didn’t need to start a congressional knife fight, especially
when they were armed with a dull plastic knife?

To underscore that point, earlier
in the week, the new SBC ranking minority SenatorSherrod Brown (D-Ohio) called for a new start
and fresh review of what in the US mortgage finance system needs fixing ,
rejecting the old CWJC legislation (which dies with the current Congress), while expressing
skepticism about the need for such a dramatic makeover.

Even more explicitly, the retiring SBC Chairman,
Senator Tim Johnson (D-SD), urged Mel Watt, when Watt testified before him on
Wednesday, to encourage the WH to move forward using executive authority
and rulemaking to change the F&F conservatorship rules.

Letters from community groups and other housing advocates
were sent to Watt/Obama urging the same thing.

Many observers suggested Congress, not desiring
another fight over F&F, was resigned to let this Administration work on the
edges of conservatorship and expand the F&F credit box, increasing
eligibility and affordability.

No, We Don’t Want
This Win; Instead. We…..

But Castro and Lew—obeying who knows what political instincts
(Lew has shown few, while in office, and Castro may be too new to display
any)—opted to ask for Hill help.

Maloni to world: “Never ask for advice or help anyone
to whom you have to listen!”

Castro and Lew to Congress: “Let’s sit together and
produce the F&F successor.” That’s like inviting cannibals to your home for
barbecue and only having four hamburgers for your 20 ravenous guests.

Just what the nation
needs another politically naïve HUD Secretary. Lew, once a Tip O’Neil protégé,
seems to have lost whatever Tip taught him about Democrat constituencies.

I hoped someone spanked
those two misbehaving kids.

Would Julian Castro pin
his political future on any mortgage reform bill the House GOP might pass?
Would he advise all of those D 2016 congressional candidates to do the
same?

Or does he think he is
smarter, more agile, and a more wizardly negotiator than those Hill conservatives?

With what does the HUD Secretary
have to negotiate? Better yet, Castro first should answer, “What do congressional
Republicans want from HUD other than to have it rapidly disappear?”

What WH D's Look Out for U.S. Mortgagors?

Does any current Cabinet official think the traditional
Democrat constituencies or the new citizens President Obama wants to help
settle in this country are best served by Jeb Hensarling and his posse?

Aggressively using inherent regulatory authority
to make Fannie and Freddie work better and more flexibly--which virtually every
housing finance and real estate industry association wants --will add more to the “Obama
Legacy,” than a GOP blessed bank dominated mortgage finance system
where the "bigs make all of the rules?

Are there any adult pols still willing to label themselves
Democrats watching these Cabinet guys, because someone should?

It
Ain’t Rocket Science GSE Supporters,

Consider
Your Home Plumbing System

Always seeking to educate and illuminate, I share these ideas
with those who believe the nation’s future mortgage finance system should have
a major doses of F&F in it. (If it works, use it.)

I’m happy to report that most American consumers and voters—when
forced to think about it—do not care what critics (mistakenly) claim is
GSE history?

They instead think in terms of today and now, when
contemplating a mortgage.

They think about being respected, treated fairly, not
getting lender-gamed or manipulated, getting affordable mortgage finance
options, and priced equitably and efficiently.

Small analogy.

At home, when you draw water from your
faucets (I mean those who don’t rely on bottled H20), how much do you ponder,
systemically, the blueprint of your house’s plumbing system, connected to the municipal
underground piping that gets fed by the locality’s water system??

Not often, I suspect.

You want clean water, pouring out of the pipes and taps, devoid
of germs, and priced well.

Fannie and Freddie opponents face an uphill fight to
replace two institutions and their market operation which most people like.

The uphill fight can be made even steeper and more difficult,
if F&F advocates keep a few things in mind about the water system.

If your water system (nee mortgage finance system) works well but has been improved with six years of solid product and systemic
regulation--and what you have is safely meeting your water (mortgagor) needs--why
scramble to turn it upside down, when the chaos inducing change easily could screw up the water
delivery, make it more costly, and far more confusing and unreliable?

The current mortgage finance system works and is being adjusted to work
better and support more mortgagors.

There was a reason that behemoth CWJC proposals, filled
with uncertainly and confusion proposal, tanked.

Keep those safe water thoughts things in mind.!

What
Others Are Saying

Seth Bornstein writing for Yahoo discusses a new Swiss study which claims banks and their culture
encourage smarmy and underhanded behavior.

I exchanged emails last week with a reporter who covers GSE
matters for a major publication and chided F&F bank critics (see
Financial Services Roundtable and the American Bankers Association) fortheir myopia.

First off, the banks—which claim they are “private”-- are into
denial, since every segment of the national financial services network is
backed by the federal government, none more than the banks with the FDIC
insurance behind and attracting most of their working capital. Their benefits
and subsidies go far beyond that with the paternal regulatory regime most banks
enjoy. (See previous link and shame on
the Fed, Treasury, OCC, FDIC and others.)

Here’s what else I told the writer.

I am used to "fast and loose" when it comes to F&F
and it's not exclusive to any political party. Most Hill denizens have no idea
what they are doing or saying, how the mortgage finance system works, or how
massive and disruptive the impact would be on the transitional change contained
in something akin to CWJC, even if the changes could be agreed upon. Who really
needs that?

The W Post last Saturday listed Fannie and Freddie as two of
the highest stock performers for the previous week. Will the Post tell us how those
“federal agencies—the ones with stock symbols and trading common and preferred
stocks, managed to do that? Probably not soon, since I still am waiting for the
paper to print its first report that Fannie Mae executives were found not to
have engaged in securities fraud, two years ago when that federal court
decision came down.

13 comments:

Thanks, maybe I was reverse-motivated by my weekend from Hell, as my wife's car got stolen and out new oil heater exploded, two days after receiving its annual maintenance check and "a new valve?" Did I mention confronting and trying to help an alcoholic motorist---whose car was sitting on the media strip--as we walked home from the nearby restaurant after dealing with police and the purloined Fiat 500 convertible?

As always thanks for all the good stuff ......This may very well be the theory of everything just replace the word banker with journalist, congress person or ???

Bankers have tendency to lie for financial gain, say scientists

By Clive Cooksonft.com — Swiss researchers have come up with what they say is compelling scientific evidence that bankers lie for financial gain. The team at the University of Zurich used game playing experiments to show "that the prevailing culture in the banking industryhttp://www.ft.com/cms/s/0/21ef6916-6fd8-11e4-90af-00144feabdc0.html

Anon--Those traditionally have been for whom the Secy (D&R) protects and coddles (see Geithner, et al).

Sherrod Brown (D-Ohio) got that onto the hearing record last week in the Senate (see the Huff Post article detailing that accommodation, which I linked in this week's blog).

What I tried to point out the WH's approach to mortgage finance reform--despite the Admin's rhetoric--did not seem to include the Democratic party's historic constituents, middle income America and minorities.

As I noted, there was nothing, repeat nothing in the CWJC proposal the WH championed that required any lender anywhere to originate mortgages for low income families.

There was a fund for that purpose but no lender mandatory use of it. Plus there was a crap load of other things which many of us argued was anti-consumer and, frankly, which was why it died after a SBC marginal SBC vote.